The general increase in prices and the consequent increase in the cost of living have placed taxation at the epicenter of the electoral campaign ahead of the municipal and regional elections that are held this Sunday. The formations that present their candidacy offer a diverse range of measures that situate the policies that make it possible to nurture public services in two well-differentiated spheres. Broadly speaking, the axis on the right –headed by the PP– proposes a general reduction in taxes such as personal income tax, inheritance and donations and patrimony, while the axis on the left –led by the PSOE– is committed to increasing the progressivity of the system and for guaranteeing public revenues to finance measures aimed at social protection.
The same antagonistic scheme is the one replicated by formations such as Vox, on the one hand, and Unidas Podemos, Compromís or Más Madrid, on the other. The far-right party promises to “drastically reduce rates and taxes, direct and indirect”, as well as to “suppress” green taxation and “to end all taxes that violate solidarity between parents and children, such as the tax inheritance and donations.
Unidas Podemos, for its part, maintains that it is necessary to increase progressivity, eliminate deductions and bonuses “for high incomes” in inheritances and donations and end any type of discount on assets. They also propose taxing real estate speculation, promoting gambling taxes and an Amazon tax, among others. Other formations, such as Ciudadanos, dedicate much less space to the subject. In its framework program, the orange formation only suggests reducing the tax burden, without specifying how to do it.
The great workhorse in the campaign, also used to sow the ground for the general elections, is the income tax, in which the communities have room for maneuver because they have an autonomous section.
The PP, in its framework program for the country as a whole, breastfeeds that its regions “have been the first to apply personal income tax deflation”, that is, to adapt it to the escalation of inflation. “And we will continue to do so as soon as the legal possibility exists, thinking above all of medium and low incomes,” they add. In the document, the popular criticize that in 2022 tax revenues have increased to unusual figures, something that Vox shares: “While the Spanish break records in misery, the Government breaks records in collection.”
In its program, the PSOE counterattacks and charges against “misguided responses and, what is even worse, discouraged by economic theory, according to which tax cuts only aggravate the problem we are going through, especially when they are tax-oriented on rent.” The Socialists detail in their program, in fact, several of the measures promoted by the central government thanks to this extra income, such as the reduction in VAT on electricity and gas, transport aid, the electric social bonus, the fuel bonus or aid for housing and rent, among others.
The latest data from the REAF of the General Council of Economists (see graph) corroborate that the deflations and reductions in regional rates have led to the fact that, in general, the lowest personal income tax is in the regions governed by the party led by Alberto Núñez Feijóo .
However, the formulas used in regions such as Madrid have allowed all income brackets to benefit equally from deflation, making the central region a true tax haven for the richest taxpayers.
On the opposite side would be the Generalitat Valenciana, of the PSOE, where the reductions in the tax have only benefited low and medium incomes, penalizing the wealthiest in parallel.
The formation led by Pedro Sánchez, within the tax bag in which the autonomous communities have powers, advocates promoting harmonization with the idea that “companies and citizens with the same circumstances and economic capacity should have similar tax treatment, regardless of where they live or operate.” For this reason, he adds, it is necessary to achieve an optimal balance so that taxation “does not distort the decisions of citizens’ vital projects or the investment decisions of companies.”
In this debate, the PP once again insists on “reducing the tax burden, always within a framework of budgetary stability and sustainable public accounts, with special attention to the effects that price increases have produced on the purchasing power of the most vulnerable and the middle classes, as well as the competitiveness of our companies”.
In wealth taxation, once again, the right-wing bloc advocates the abolition of the wealth tax, while the left-wing parties promise to end the bonuses promoted by the PP in several autonomies. These decisions led the central government of Sánchez to implement the temporary tax on large fortunes, a figure that the PSOE shows off in its program.
The trend is relatively similar at the municipal level. In the real estate tax, the main source of financing for the municipalities, the PP promises that “we will continue” with the reduction “progressively”, adding bonuses for homes with charging points for electric cars. In the economic activities tax, the path to the right also involves reducing the situation coefficient and establishing bonuses for companies that start the exercise of any business activity. Something similar occurs with the proposals regarding the tax on constructions, installations and works.
On the other hand, Unidas Podemos suggests redesigning the IBI based on income, establishing an increasing scale according to the value of the property and bonuses according to economic circumstances. The purple formation also proposes a tourist tax with a municipal surcharge. Más Madrid, for its part, suggests a tax on large commercial areas and final environmental taxes, something that the PSOE also proposes.
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